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clearly if the participant earned in excess of the dollar threshold, any catch up contributions would be funded as Roth Contributions. What happens if the plan fails the ADP test and funds are "reclassified" Roth contributions? I would image the requirement to fund catch up with Roth would not apply in this case since the contributions were part of the 402(g) limit, funded with pre tax and not a REAL catch up. Am I correct?

We have a client that over the past couple of weeks has been paying severance pay due to layoffs. Included with the severance pay is the participant's unused PTO. The severance is not eligible for 401(k) but the PTO is. Question - this payment is done "off cycle" however, the actual funding of the deferral takes place with the next regular payroll file feed to the recordkeeper. This means there is a lag of 3 -5 days before the deferrals from the off cycle are submitted. The client normally funds the deferrals the day of payroll, but the off cycle will be 3 - 5 days before funding. Client is concerned there is an issue and the off cycle should be funded before the regular payroll file feed. - HR is concerned this will mess up payroll and require manual posting. Also, there may be chance, HR sends the deferral file and payroll also picks up the payment. Since the client funds the contributions the day of payroll and waits 3 -5 days for the off cycle the client is concerned the auditors will flag this as a late deposit. This has always been the practice however the recent layoffs, has caused some concern if this is an issue. Clearly, the contributions are funded as soon as "administratively" feasible from the date they are withheld. The payment is made well before the infamous 15 days under the DOL reg. Any thoughts if there are issues with continuing the process as is?

Under the EACA the participant has 90 days to request their funds if they do not want to enroll. The account adjusted for income is paid to the participant Question - the Recordkeeper wants to invest the Auto Enrolled deferrals into an "interim" fund until the end of the 90 days vs. the QDIA. Then if the participant did not request payment, the account is moved to the QDIA. I can not find that the interim fund is a requirement. Everything indicates the AE is funded to the QDIA and if the participant takes his payment during the 90 days, they get the value of the deferral account ( gain or loss). Am I correct. Is this just the process for the recordkeeper vs regulation? Thanks

Employer sponsors a QACA with discretionary match. There will be some layoffs at the end of the month. The layoffs will NOT result in a partial termination. Client wants to vest this group 100% regardless of their current vesting %. Question: Can the plan draft an amendment that will allow the participants in this layoff group to vest 100%? Thanks

Plan had late deferrals that were all funded during the plan year. The recordkeeper posts the contribution and then a few days later the income is posted. Recordkeeper requires the Sponsor to approve the ACH for the income. Regarding the Form 5330 Schedule C #5 - date of correction is this the date the file was sent to the recordkeeper? or the date the deferrals were posted or the date the lost income was actually posted to the account

Employer has been a participated in a MEP for several years. Not an auto enrollment plan As of 1/1/2025 the plan will move to a PEP. Does the move to a PEP trigger the Auto Enrollment requirement for 2025? Or is the plan grandfathered since it was in place prior to the Auto Enrollment Requirement. Getting different responses from recordkeeper and TPAs? Thank you.

Immediate Eligibility - plan excludes seasonal employees In the "good ole" days, employer only had to worry about enrolling these employees if they worked 1,000 hours now they have to contend with the 500 rule. The problem is seasonal employees leave and come back on a regular basis Hired 5/1/2023 1. Need to look at hours worked from 5/1/2023 - 4/30/2024. Participant worked a total of 650 hours. However he left and came back twice during this period 2. Plan switches to plan year - The plan then measures hours from 1/1/2024 to 12/31/2024 - assume during this period he works 650 hours. Participant would be eligible to enter 1/1/2025. Am I looking at this correctly? The fact the employee left and came back during the initial 12 month period, does his hours pre termination count towards the 500,or does the counting start all over? I thought I read LTPTE rules do not include the break-in service rules or concept. Thanks

Compensation includes bonuses. Participant A made an affirmative elective to defer Participant B was auto enrolled. There were bonus payments issued in 2024 and deferrals were not withheld. How to correct - Does the 9 month rule apply so no QNEC is required? The 9 month rule would apply if the initial elections were not timely processed.( assuming deferral elections must be properly implemented consistently from April 1st - December 31st The question is does the 9 month rule apply regarding missed deferrals subsequent to enrollment. Deferrals properly calculated. When the bonus was paid no deferral was calculated, We have differing opinions One opinion is the 9 month rule applies even though these are deferrals after the initial elections were processed The other opinion is the 9 month rules does not apply since these are missed deferrals subsequent to enrollment and are subject to a QNEC

All I am asking is if the successor beneficiary of the IRA dies and his wife is his beneficiary, does she get 10-years for payout or since the original successor was using stretch payment, can she set up her own stretch payments. From all of my reading she is only eligible for 10 year payment, but I am trying to confirm this.

1. Harry inherited his Mom’s IRA in 2019 2. Harry is using the stretch IRA and taking payments based on his life expectancy. 3. Harry is married In the event of the Harry’s death what happens to his inherited IRA. 1. Can his wife roll the funds to her IRA? 2. Can the wife take payments based on her life expectancy? 3. Is the wife deemed a Designated Beneficiary and eligible to continue taking advantage of the stretch provisions. Thanks

401(k) Safe Harbor ( 3% Non Elective) Compensation is defined as W-2 wages - the only exclusion are fringe Benefits. Participant has GTL wages - The auditors agree GTL is subject to salary deferral however, their position is this is a fringe benefit and not included in the 3% safe harbor. In addition participant received Short Term Disability benefits - paid by the employer and included in W-2 wages Again the auditor agrees this payment is subject to salary deferral, however, it could be deemed a fringe benefit and therefore not included in the safe harbor calculation. Thoughts from the group? Are these wages really deemed fringe benefits and not subject to the 3%? Problem will be solved for 2025 for GTL will change to 3401(a) compensation.

participant was over the age of 59 1/2. so he could have taken a payment. Not really sure why he terminated, but I think he did not think he was going to have any additional income to fund a solo Roth 401(k). Turns out he will have income for the next couple of years and wanted to establish a new solo 401(k). Since he had a distributable event before the termination, the 12 month rule should not be an issue. Do you agree. Thanks

Does the 12 month rule ( terminating 401(k) and starting a new plan) apply to a Solo 401(k) Plan. In December of 2023 solo 401(k) sponsor terminated his Roth 401(k) and rolled the funds to his Roth IRA. Now he wants to start another Solo 401(k) for 2024. Does the 12 month rule apply in which case he can not defer to the new plan until 2025? Thank You

Participant is applying for a hardship - was in a FEMA county deemed a disaster. Seeking a hardship to cover the cost for repairs to a primary residence. 1. The participant financed the initial work on the exterior of the house. 2. Now she needs to pay for the drains, repair to the concreate floor and drywalling. - This cost is $14,908 The question is, can the participant take a Hardship for the cost of the initial repair along with the second round of repairs? The first part was financed on a credit card with an outrageous interest rate. participant wants to combine the two costs and take on e Hardship. (1) pay off credit card for the initial work and (2) pay the contractor for the second round of work. thanks Teresa

1. Plan established 2022 2. Prior year testing method elected in the document 3. Discretionary Match - nothing funded for 2022 For the first year, the 3% rule was used - HCEs 0% NHCEs 3% - plan passes ADP They never made a match until 2023. Since this was the first plan year of the match, can they use the 3% first year rule for the match contribution?